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Tony Alexander BNZ Economist ‘Weekly Overview’ 10th March 2016

Nothing this week beyond a restatement of our key thoughts.
Aucklanders since just before the middle of last year have been buying assets in the regions. The locals
have seen this and joined in. Construction in the regions is rising now that supply is drying up and people
are buying into stories of Auckland being so expensive that there will be a flood of people leaving the city to
live in the wonderfulness of our smaller urban locations. They won’t in bulk numbers though a few people will
and the local media will write about them. There will be over-investment in new subdivisions and dwellings in
some areas because of over-optimistic population growth forecasts and eventually, a few years from now,
this will cause problems for some late cycle investors. For now the ball is rolling.
Many investors are still adjusting to a world of permanently low interest rates and they have yet to enter
housing markets. Their yet to arrive buying will help underpin all locations these coming couple of years.
The Chinese buyers will eventually come back into Auckland as they find ways to get capital off the
Migration net inflows will stay strong and remain concentrated in Auckland, worsening the housing shortage,
pushing prices higher.
House building will be a strong source of economic stimulus for the economy in all but Christchurch over the
next two or three years. Construction costs will rise, difficulties sourcing tradespeople will grow”

to see the full report please follow this link; Tony Alexander 10th March 2016

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